MD3010 Warmer Homes 3 and Warmer Homes Advice Service

Background

1.1    The Mayor wants to make London a zero-carbon city by 2030, whilst protecting the most disadvantaged Londoners by tackling fuel poverty as part of his response to the cost-of-living crisis. This is a stretching ambition given the scale of fuel poverty and the low take-up of energy-efficiency measures. Tackling fuel poverty is key to London’s recovery from the COVID-19 pandemic and works to achieve two of the London Recovery Programmes priority missions: A Green New Deal and a Robust Safety Net. 

1.2    In 2020 there were 404,000 households living in fuel poverty in London, which equates to 11.5 per cent of all households. The Mayor has set out his programme of actions to address fuel poverty in London (consistent with his powers) in his Fuel Poverty Action Plan. 

1.3    Low-income Londoners are facing a cost-of-living crisis, with the ongoing impacts of coronavirus exacerbated by rising energy prices, tax increases and rising inflation. Since October 2020 the price cap on energy bills has risen by 89 per cent and will almost certainly rise by a significant amount again in October 2022. Alongside the ending of the uplift on Universal Credit and inflation running at over 6 per cent, many households in London are likely to struggle with fuel bills and other costs. Polling early in 2022 has shown that 32 per cent of Londoners have struggled to pay their household bills in the previous six months. 

1.4    MD2900 approved receipt of the Sustainable Warmth funding from the government and agreed a procurement process for a delivery partner. MD2900 did not fully agree the details beyond the total funding amount that would go to households and the split between works and administration and ancillary. This Mayoral Decision form outlines the breakdown of funding available to social landlords, a marketing allocation and contingency funding. It combines this with approval for Mayoral spending on the Warmer Homes and Warmer Homes Advice Service programmes. 

Warmer Homes programme Mayoral funding

1.5    Warmer Homes has been running since January 2018, with an overall investment from the Mayor so far of £11.86m; by this summer it will have improved the homes of almost 2,500 owner-occupiers and private tenants. The programme has also attracted match-funding of £8.87m from central government, energy suppliers and boroughs. 

1.6    This year's Warmer Homes 3 programme will combine the Sustainable Warmth Funding we have secured from BEIS with the Mayor’s Warmer Homes funding of £2.6m, into a single programme under a recognised brand. Whilst the GLA has been successful in securing £40.2m of Sustainable Warmth funding (see MD2900) this cannot be used to fund the repair or replacement of gas boilers. Although the installation of low-carbon forms of heating will be essential in meeting the Mayor’s 2030 target, gas is still the main heating fuel in the vast majority of London households. Many homes will be currently unsuitable for the installation of low-carbon forms of heating, such as heat pumps, and the repair or replacement of their gas boiler may be the only feasible short-term fix. Households applying to the programme that are not on a low income are being directed to the government’s Boiler Upgrade Scheme.

1.7    It is proposed to allocate Mayoral funding totalling £2.6m to the Warmer Homes programme in 2022-23. This will be split into two parts: £2.5m in grants to households, and £100k in service management fees to the contractor.

1.8    Grants will be fixed at £5,500, available to qualifying low-income owner-occupiers and private tenants. In total, 454 households will receive funding. 

1.9    RetrofitWorks went through a full procurement process before being selected to deliver Warmer Homes 3 and are already providing services which are similar to those required to deliver the core-funded element of Warmer Homes. After consultation with TfL Procurement and Supply Chain colleagues, officers have assessed that that a change of contractor cannot be made for technical reasons including interchangeability with existing services procured under the initial procurement, because changing contractor would necessitate two processes for applicants, and two contractors would have to conduct two separate household assessments. Officers have also assessed that a change of contractor would cause substantial duplication of costs for the GLA as contracting authority.  

1.10    Therefore, it is proposed that the value of this contract be added to our existing contract with RetrofitWorks to deliver Warmer Homes 3, which is currently solely dedicated to delivering the requirements of the Sustainable Warmth funding (MD2900). The value of the increase does not exceed 50% of the value of the original contract. This will be the subject of a variation recommendation to the GLA Assurance Meeting seeking approval and Procurement Authority on the basis that it is permissible under Regulation 72(b) of the Public Contracts Regulations 2015 (PCR 2015). 

Sustainable Warmth funding for social housing

1.11    The government permits up to 10 per cent of the homes receiving funding through the Sustainable Warmth grant to be social housing, with funding between £5,000 and £16,666 available per home depending on the existing energy-efficiency rating and fuel type. In contrast to the other Sustainable Warmth funds, funding is not awarded to individual households but to the social landlord. As in the private rented sector the landlord must contribute at least one-third of the overall cost. 

1.12    According to the terms of the grant funding, up to £2,033,295 of the Sustainable Warmth funding can be made available to social landlords for works with a further £254,165 available for ancillary and administration costs. 

1.13    Officers have been in discussions with social landlords across London, but have not yet discussed any final proposals. Delegation is sought to the Executive Director of Good Growth to agree to proposals from social landlords. 

Sustainable Warmth marketing and engagement 

1.14    The requirements of the Sustainable Warmth funding are that we reach a very specific group of households: 75 per cent of homes should be owner-occupied; 15 per cent privately rented; and 10 per cent rented from social landlords (see 1.11-1.13). Furthermore, 36 per cent of homes are required to be off the gas mains; and 70 per cent must be in the lowest energy-efficiency rating bands (E, F and G). Homes that have low energy-efficiency ratings, and are off the gas mains, are significantly more likely to be fuel-poor. 

1.15    The income eligibility criteria are also very strict, with households typically requiring an income of below £20,000 after housing costs. 

1.16    Taken together, these factors pose several challenges. With the limited marketing undertaken through previous phases of Warmer Homes, we have reached low numbers of private tenants, homes off the gas mains, and homes with the lowest energy-efficiency ratings. Of the applications under Warmer Homes 2, only 20 per cent had energy-efficiency ratings E-G, only 12 per cent were in the private rented sector, and only 7 per cent were homes off the gas mains. 

1.17    Blanket promotion will therefore not be effective in reaching the right households. The intention is to direct marketing materials at homes likely to be eligible. This will be done through a mixture of mailings from the GLA and from boroughs. Targeted promotion from the GLA has already taken place, with 45,000 leafleted. In addition, we are jointly mailing out with boroughs – an action already commenced with Islington and Southwark – and officers are also in discussions with several others about a rolling schedule of joint mailings over the Summer and Autumn. Customer contacts are a key performance indicator (KPI) agreed with the funder, and we are required to contact at least 80,000 homes at least once by 31 December 2022. 

1.18    The marketing budget, whilst high, reflects the scale and complexity of the nuanced and targeted marketing required to effectively reach the people who are eligible for this funding.

1.19    The budget of up to £716,000 will principally be used to send direct mailings to households across London believed to be eligible for the funding. Allocations will be provided to boroughs who submit proposals for reaching eligible residents.

1.20    Approval is sought to allocate a marketing budget of up to £30,000 each to 20 participating boroughs (a total of £600,000); and for any not used, and the remainder (£116,000 or more), to be available for other marketing initiatives. The costs are comparable to those incurred by energy suppliers in meeting their Energy Company Obligation (ECO) to improve the energy efficiency of homes. Delegation to the Assistant Director for Environment and Energy, in consultation with the Mayoral Director, Communications, is sought to approve all such marketing initiative proposals, and to repurpose any underspend in this element into additional works in homes. Such initiatives will include those aimed at ensuring marketing reaches those in groups suffering disproportionately from fuel poverty, such as BAME communities and people with disabilities and long-term conditions. 

Warmer Homes Advice Service 

1.21    The Mayor’s Warmer Homes Advice Service has operated since February 2018; by April 2022, it had assisted over 14,700 London households, reaching low-income Londoners in every borough. It does this by stitching together existing fuel-poverty advice and referral networks into a pan-London service.

1.22    The service has been delivered by the boroughs of Islington, Kensington & Chelsea, and Lewisham since the start. It is proposed that we direct grant awards to these boroughs, rather than – as previously – run a competitive process. This recognises that they are the only boroughs capable of providing cross-borough services; and that they have successfully built a network of over 300 partner organisations. With the current funding round coming to an end at the end of May 2022, it also minimises the gap in provision at a time when Londoners are experiencing a cost-of-living crisis.

1.23    Details and targets have been negotiated with the boroughs concerned and the areas covered.  The funding allocated is given in the table below:

1.24    In addition, £790,000 was recently approved by MD2991 to run a broader energy-advice platform and deliver capacity beyond that of the boroughs. This is expected to be a key source of information for Londoners on Warmer Homes, but the Warmer Homes Advice Service will continue to provide more intensive support for vulnerable households, including home energy-advice visits and support with energy and water debt. 

Sustainable Warmth contingency funding

1.25    A proportionately small contingency budget was built into the Sustainable Warmth bid to allow us flexibility to adapt to what is needed to roll out the programme most effectively. It sits within the 15 per cent that is permitted for administration and ancillary, and can be spent on either that or works in homes. A sum of £1,580,540 has been set aside, amounting to just under 4 per cent of the entire allocation. This can be spent on additional energy-efficiency measures in homes; enabling works; marketing, staffing; legal costs including for data protection advice; costs arising from home assessments that do not lead to installations (provision of £250,000 for up to 1,000 homes has been allowed for in the contract); or other unforeseen costs.

1.26    It is proposed to delegate authority to the Executive Director for Good Growth to authorise detailed spending proposal on this element. 

Summary of budget and resources:

Warmer Homes 3 Mayoral funding

2.1    The expected key outputs from the Sustainable Warmth grant programme are:

• 454 low-income households supported – these households will benefit from a range of energy-efficiency measures, but principally gas boiler repairs or replacements
• minimum annual fuel bill savings for Londoners of £81,720
• minimum annual CO2 savings of 237 tCO2
• minimum annual energy savings of 1,104,324kWh.

2.2    Warmer Homes 3 will be primarily focused upon addressing fuel poverty whilst providing the scope to extend into the Able to Pay sector. Based on analysis undertaken by the Environment and Energy Unit and the policy proposals set out in the London Environment Strategy, there are several key principles to ensure the programme achieves the best possible outcomes and paves the way for increased uptake of home energy-efficiency packages to:

• support the most disadvantaged in society through grants to fuel-poor households
• provide a flexible approach to delivery to build on the success of Warmer Homes and meet residents’ needs, regardless of tenure
• ensure high-quality outcomes by implementing best-practice standards; and build a trusted, London-based supply chain
• work with other programmes including London Power and the Retrofit Accelerator – Homes to maximise impact and share best practice
• work with partners, including London boroughs, to increase local delivery capacity 
• contribute to the development of a strong evidence base to help lobby government.

Sustainable Warmth funding social housing allocation 

2.3    The expected key outputs from this element of the programme are:

• 315 social housing units improved
• minimum annual fuel bill savings of £56,700
• minimum annual CO2 savings of 164 tCO2
• minimum annual energy savings of 766,216kWh.

Since the funding is targeted solely at homes with Energy Performance Certificate ratings of D to G, this will have a significant impact on low-income Londoners living in the least energy-efficient social housing.

Warmer Homes Advice Service 
2.4    The expected key outputs from the Warmer Homes Advice Service 2022-2023 are:

• minimum of 2,975 low-income households supported
• minimum of 1,790 home energy-advice visits undertaken
• minimum of 355 households assisted with fuel and water debt
• minimum of 415 households assisted with Warmer Homes applications
• minimum of 1,240 households assisted to enrol on a social tariff
• minimum of 50 new referral partners recruited. 
   

3.1    Under section 149 of the Equality Act 2010, as a public authority, the GLA is subject to the public sector equality duty and must have due regard to the need to:

• eliminate unlawful discrimination, harassment and victimisation
• advance equality of opportunity between people who share a relevant protected characteristic and those who do not
• foster good relations between people who share a relevant protected characteristic and those who do not. 

3.2    Protected characteristics under section 4 of the Equality Act are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex, sex orientation, and marriage or civil partnership status (all except the last being “relevant” protected characteristics).

3.3    The GLA will take appropriate steps to ensure there are no potential negative impacts on those with protected characteristics in relation to the development, design, targeting, marketing and delivery of the scheme. This will be done by ensuring compliance with the Mayor’s Equality, Diversity and Inclusion Strategy and developing and testing in line with GLA guidance on equalities and diversity. Those with protected characteristics will gain from the positive benefits of this scheme in equal measure should their households be eligible, and there will be equality of access to participate in the delivery and benefit from the scheme, without discrimination. 

3.4    BAME communities are almost 60 per cent more likely to be fuel-poor than White households; those with disabilities or long-term illnesses are 50 per cent more likely to be fuel-poor. The project team will therefore particularly engage with BAME communities, and people with disabilities or long-term illness; they are currently working with the NHS to develop London-wide pathways for the latter. The Warmer Homes team will make particular efforts to reach these populations through engagement with partners, particularly those represented on the Fuel Poverty Partnership such as the NHS and Runnymede Trust. 
 

Links to Mayoral strategies

4.1    Relevant London Environment Strategy policy proposals: 

• Proposal 10.1.2.a: To support start-ups and business growth across the economy, including in the low carbon and environmental goods and services sector.
• Proposal 10.1.1.e: The Mayor will work with stakeholders from across the financial and environmental sectors to develop financing mechanisms.
• Proposal 6.1.2.a: The Mayor will work with partners to help alleviate fuel poverty in London through implementing the recommendations of the Fuel Poverty Action Plan.
• Proposal 6.1.1b: Pilot innovative methods to implement the stronger energy-efficiency retrofitting needed.
• Proposal 6.1.1a: Contribute to helping Londoners improve the energy-efficiency of their homes, where appropriate, by providing technical assistance, support and funding. 

4.2    Relevant Fuel Poverty Action Plan actions are:

• Earmark over £10m over the next four years for new energy-efficiency delivery programmes. 
• Implement a programme to help Londoners, particularly the long-term ill and disabled, through ensuring that they are getting access to all of the income support they are entitled to, including Benefit Entitlement Checks.
• Provide a Fuel Poverty Support Fund of up to £500k over four years (2017-18 to 2020-21) to support the rollout of local advice and referral networks, including home-visiting services, as a way of helping to improve the living conditions of fuel-poor households.
• Improve identification of vulnerable energy and water consumers, and ensure that they are aware of support available to them.
• Support the rolling-out of existing local authority and community advice and referral networks, as a way of helping to improve the living conditions of fuel-poor households.
• Call on government to devolve Energy Company Obligation funds to the Mayor to disburse including through his Energy for Londoners energy-efficiency programmes.

4.3    The relevant Equality, Diversity & Inclusion Strategy objective is Strategic Objective 12: to work with government, businesses, transport providers, voluntary groups and all relevant partners to help ensure our approach to tackling fuel poverty and improving green spaces is inclusive.

4.4    The relevant Health Inequalities Strategy objective is: through the Mayor’s London Food Strategy and Fuel Poverty Action plan, work with partners to tackle food poverty and fuel poverty and their impacts on vulnerable Londoners.

4.5    Relevant recovery missions are:

• A Robust Safety Net – the pandemic has impacted on Londoners’ incomes and household bills and support from the Warmer Homes programmes will help to relieve hardship.
• A Green New Deal – Londoners living in fuel poverty are more likely to experience cold, damp homes; the Warmer Homes programmes support them to use energy more efficiently and access funding for heating and insulation improvements. The programme will also help create new green jobs and skills for Londoners. 

Governance

4.6    The delivery of the Sustainable Warmth funding will be led by the Energy team, with staffing resource taken on to deliver this. A Programme Board has also been established with representation from the London sub-regions, the GLA and London Councils. 

4.7    The service provider for Warmer Homes 3 reports to the Energy team on performance against KPIs on a weekly basis, as well as current and forecast activities for each work stream and programme-wide and project-specific risks and issues. The Energy team will in turn report to BEIS on a monthly basis. 

4.8    Key risks and issues

Conflicts of interest

4.9    There are no conflicts of interest to note for any of the officers involved in the drafting or clearance of this decision form. 
 

5.1    Expenditure of up to £7.534m is required for the delivery of the Warmer Homes 3 programme. £4.584m of this will be funded from grant income received from the BEIS to help support low-income households in London in attaining energy-efficient and low-carbon heating upgrades. The remaining balance of £2.95m will come from the Authority’s budget provision for the Warmer Homes initiative. 

5.2    All expenditure is anticipated to take place during the 2022-23 financial year – particularly the external funding element, as this forms part of the grant agreement with BEIS. Due to the large amount of funding within a small set period, there is a risk of residue funds. To mitigate against this, this decision proposes to use existing external contractors who have experience in delivering specific parts of the programme. Furthermore, key deliverables will be built into these contracts to ensure KPIs are being met alongside monthly monitoring meetings. As the funds from BEIS have been dispatched upfront, any unspent funds will be returned accordingly. 

5.3    The expenditure described within this decision contain a mixture of capital and revenue costs; therefore, the GLA will ensure they are recorded accordingly in line with the appropriate accounting standards.
 

Powers

6.1    The foregoing sections of this report indicate that the decisions requested of the Mayor fall within the statutory powers of the Authority to promote and/or to do anything which is facilitative of or conducive or incidental to social development within Greater London and in formulating the proposals in respect of which a decision is sought officers have complied with the Authority’s related statutory duties to:

• pay due regard to the principle that there should be equality of opportunity for all people
• consider how the proposals will promote the improvement of health of persons, health inequalities between persons and to contribute towards the achievement of sustainable development in the United Kingdom
• consult with appropriate bodies.

6.2    In taking the decisions requested of him, the Mayor must have due regard to the Public Sector Equality Duty; namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advance equality of opportunity between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment) and persons who do not share it and foster good relations between persons who share a relevant protected characteristic and persons who do not share it (section 149 of the Equality Act 2010). To this end, the Mayor should have particular regard to section 3 (above) of this report.

6.3    The Mayor may, under sections 38 and 380 of the Act, delegate the exercise of the GLA’s functions to the Executive Director of Good Growth as proposed. 

Funding

6.4    In the first, second and fourth decisions of this decision form, officers have sought approval for a programme of funding aimed at providing energy efficient improvements to 454 London homes, plus improvements amongst eligible social housing dwellings. Officers are reminded that they must adhere to the requirements of section 12 of the Authority’s Contracts and Funding Code when distributing the funding.

6.5    Moreover, the proposals in this decision form include the provision of capital grant funding to support registered providers of social housing to make improvements to an agreed number of their social homes.  This funding is likely to constitute “social housing assistance” within the meaning of Section 32 of the Housing and Regeneration Act 2008 (where financial assistance is given on condition that the recipient “… acquires, constructs, converts, improves or repairs any housing or other land for use as social housing …”).  Accordingly – and insofar as the grant provided is capital rather than revenue – the GLA’s “Recovery of Capital Grants From Registered Providers and Recycled Capital Grant Fund (Greater London) General Determination 2017” and related provisions under the GLA’s Affordable Housing Capital Funding Guide will apply to the grant by virtue of Sections 32 to 34 of the Housing and Regeneration Act 2008.  This means that, where a “relevant event” defined in the Recovery Determination arises in respect of one of the grant-funded social homes, the grant recipient will either be required to repay the grant or recycle it into their Recycled Capital Grant Fund (for further social housing use, as permitted by the GLA), as specified by the Recovery Determination.

6.6    It should be noted that, in accordance with Section 333ZE(3) of the Greater London Authority Act 1999, if the GLA receives any repayment of grant that it has made for the purposes of social housing (as in this case), the GLA is required to use such repaid amount “for the purposes of social housing”.

Procurement

6.7    Officers must ensure that any external services or supplies required in relation to the activities described are procured in accordance with the Authority’s Contracts and Funding Code and with the assistance of Transport for London’s Procurement and Supply Chain team.  Furthermore, officers must ensure that appropriate contractual documentation be executed by both the Authority and the relevant service providers prior to the commencement of the required services.

6.8    Officers have indicated in sections 1.9 and 1.10 that their assessment is that a change of contractor cannot be made for the reasons provided, and that a change of contractor would cause substantial duplication of costs for the GLA as contracting authority. Based on that assessment, TfL Procurement and Supply Chain have recommended that a variation to the existing contract with RetrofitWorks is permissible pursuant to Regulation 72(b) of the PCR 2015.